Cliff Asness, the founder of AQR Capital Management, once worked in the Asset Management Division of Goldman Sachs as managing director and director of quantitative research. He also has a solid education and research background in investments. He is a BS in Economics from the Wharton School and a BS in Engineering from the Moore School of Electrical Engineering at University of Pennsylvania. He has also received an MBA with high honors as well as a Ph.D. in Finance from University of Chicago, where Asness has been the research assistant to Eugene Fama, the influential efficient market theorist. Asness has also authored papers about various financial topics and has gained many rewards for his articles.
In this article, we are going to focus on Asness’ stock picks with high upside potential. All companies have at least $10 billion market cap and their analyst recommendation scores are lower than 2.0 (5=strong sell, 4=sell, 3=hold, 2=buy, 1=strong buy). The market data is sourced from Finviz. Additionally, as of September 30, Asness’ AQR Capital reported to own at least $20 million of these positions.
Company Name | Ticker | Value | Activity | Analyst Recom |
CHEVRON CORP NEW | (CVX) | 118044 | 17% | 1.9 |
APPLE INC | (AAPL) | 110643 | 81% | 1.7 |
PROCTER & GAMBLE CO | (PG) | 102674 | 25% | 1.8 |
PFIZER INC | (PFE) | 81848 | 45% | 1.8 |
COCA COLA CO | (KO) | 67915 | 37% | 1.7 |
FREEPORT MCMORAN | (FCX) | 63424 | 362% | 1.8 |
WELLPOINT INC | (WLP) | 59964 | 16% | 1.9 |
GENERAL ELECTRIC CO | (GE) | 59856 | 11% | 1.9 |
JPMORGAN CHASE & CO | (JPM) | 55745 | 29% | 1.8 |
MERCK & CO INC NEW | (MRK) | 49536 | 68% | 1.9 |
CARDINAL HEALTH INC | (CAH) | 40936 | -1% | 1.9 |
ORACLE CORP | (ORCL) | 37025 | 39% | 1.9 |
EDISON INTERNATIONAL | (EIX) | 31673 | -19% | 1.9 |
P N C FINANCIAL | (PNC) | 30245 | 44% | 1.9 |
GOOGLE INC | (GOOG) | 27196 | -3% | 1.8 |
UNITEDHEALTH | (UNH) | 25504 | -15% | 1.8 |
C S X CORP | (CSX) | 22588 | -26% | 1.9 |
The biggest position on the list above is Chevron Corp (CVX). At the end of the third quarter, AQR Capital reported to own $118 million worth of the stock. Since then, the stock returned 15.83%, versus 11.62% for SPY in the same period. The energy company has a market cap of $211.89B and a P/E ratio of 7.89. The average analyst recommendation score for CVX is 1.9, indicating some form of perceived value of the stock. Besides Asness, Bill Miller is also bullish about CVX. At the end of September, his Legg Mason Capital Management had $125 million invested in this stock.
Another energy stock with high upside potential that Asness is in favor of is Pfizer Inc (PFE). The stock has an average analyst recommendation score of 1.8. During the third quarter, AQR Capital boosted its PFE stakes by 45%. As of September 30, the fund disclosed to own $82 million worth of PFE shares. Since then, PFE returned 23.66%, beating the market by 12 percentage points. Ken Fisher’s Fisher Asset Management invested $389 million in PFE at the end of September.
Other mega-cap stocks with high upside potential that Asness loves include Apple Inc (AAPL), Procter & Gamble Co (PG), Coca Cola Co (KO), General Electric Co (GE), JPMorgan Chase & Co (JPM), Merck & Co Inc (MRK), Oracle Corp (ORCL), and Google Inc (GOOG). The large positions of Asness’ portfolio are concentrated in energy and technology sectors, which are generally underpriced and are more likely to perform well in the future. We strongly recommend investors to focus on Asness’ stock picks with high upside potential and we believe that by doing so, investors will be more likely to outperform the market in the long run.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
